Block 9/2b Kraken (Licence P1077)

Nautical’s first awarded licence in the UKCS is located on the East Shetland Platform, west of the North Viking Graben. The Kraken structure is a large 3 way dip closed high on which oil was discovered in the Heimdal Sandstone Member of the Tertiary (Palaeocene) system by the 9/2- 1A well  drilled in 1985 and successfully appraised by the joint venture’s 9/2b- 2 commitment well in 2007. This appraisal well not only encountered oil bearing Heimdal Sandstone which correlates with the 9/2b- 1A well (known as Unit III sands) but also penetrated an additional thin lower oil bearing Heimdal Unit I sandstone.

The results of 9/2b- 2 proved an oil column of at least 77m and an oil down to (ODT) 51 metres deeper than 9/2- 1A. A third appraisal well, drilled in September 2008, was located in a down dip area to the northeast of the discovery wells in order to substantiate the oil column by intersecting the oil water contact and to investigate the upside (P10) resources. However, in this outlying area, the Heimdal Sandstone Member proved to be absent, which limits the northeastern upside and curtails the best estimate contingent resources to 83mmbo (29mmbo net) in the core area and to the north and south of the 2 successful wells. There are additional best estimate prospective resources of 114mmbo (40mmbo net) to the west of the fault, above the ODT in the 9/2b-2 well.

The reservoir quality in all sands was excellent, exhibiting both high porosity and permeability. Gravity of the oil is 15° API and viscosity is around 110cp or less, being a higher API and much less viscous than both Bressay (1,000-1,500cp) and Bentley (>2,000cp) and more similar to the producing Captain Field which is expected to exceed a 50% recovery and continues to produce at around 25,000bopd.

The fact that an oil water contact (OWC) was not encountered in the 9/2- 1A and 9/2b- 2 wells enhances the probability that the aquifer support will be through an edge water drive rather than a bottom water drive which allows improved control over water production and injection thus optimising oil production and ultimate recovery from the reservoir. This is supported by geochemical analysis which indicates that, although the oil is biodegraded, it is not water washed implying the water leg is remote from the core of the structure.

During 2009, controlled source electromagnetic (CSEM) surveying, a relatively new geophysical technique to the North Sea designed to distinguish high resistivity oil zones from their surroundings, has been commissioned to further define the extent of the reservoir.  A single test line acquired in January has confirmed a high resistivity anomaly which is indicative of oil filled sands both to the north, east and south of the discovery wells but not around the 9/2b-3 well which is consistent with the sands being absent. Given these encouraging results a broader CSEM coverage of six lines was acquired in June aimed at delineating the oil filled sands over the structure. Further encouragement is evolving from the preliminary processing of these data.

Enhanced seismic processing techniques such as special filtering and regional structural and sedimentological studies are in progress to more accurately predict sand distribution over Kraken. These studies along with detailed analysis of seismic amplitudes interpreted at shallower Heimdal levels will be combined with the CSEM results and integrated with previous models to define the reservoir distribution and to establish a target for a further appraisal well. Nautical intends to drill this in the first half of 2010 prior to submitting a field development plan (FDP) to the Department of Energy and Climate Change (DECC) by the end of 2010. The joint venture is currently favouring a phased development solution.

Through judicious farmouts to both Canamens AS and Celtic Oil Limited, Nautical has retained a substantial interest and operatorship of this large oil discovery. The most recent farmdowns have resulted in Nautical’s exposure to the 9/2b- 3 well being reduced to zero and the securing of an additional cash bonus on FDP approval.